Pharmaceutical trade amongst Asian countries has long been a story of gross underutilization owing to variety of restrictive policies pursued by the governments in the region. The policy of quantitative restrictions (QR) on imports and high tariff barriers had been put up on the rationale of protecting the domestic industries from a deleterious foreign onslaught. Coupled with this was a doubt perception among the countries in the region about the quality of each other''s drug regulatory setups.

With QRs and tariff walls disappearing, the barriers that still remain are regulatory. Pharmaceutical trade between Asian countries continues to be shackled by varied import registration systems, multiple licensing requirements, disparate regulatory laws relating to GMP, GLP, drug testing etc, and sundry policies followed by the governments on price control on medicines. These "non-tariff barriers" need to be dismantled expediently through a concerted attempt by major countries in the region if the situation has to change for the better at this most opportune time.

Even the regional trade treaties and other arrangements haven''t come to change the dismal situation in a major way. For example, the Asean Industrial Cooperation Scheme (AICO), which allows companies in the ASEAN region to promote joint manufacturing and resource sharing has never been used by India. Under the AICO arrangement, two or more companies belonging to the region are being offered preferential tariff rates and other incentives.

Indeed, Asian pharmaceutical industry is growing faster, with the market volumes soaring in a haste seen never before in the history of this sector. But, on a global account, the pharma industry in Asian countries continue to be pigmies with their sizes being a poor comparison to the industry of the developed West. If this is a disgrace, all countries in the region barring Japan and Korea have it. Even the comparatively bigger countries seemingly on the path of self-reliance in pharmaceutical production, like China, Korea, India, Philippines, etc. have to be on a much faster growth trajectory to become "global players." This is despite the largest geographical size and huge population of this continent.

The underutilization of the trade potentials in the region is quite manifest. Despite having the two largest pharma industries of the region, Korean imports of finished pharma products from India have been confined to anti-TB drug rifampicin. The drug is being exported to Korea from two manufacturing setups in India, which has Korean equity participation. Although the production of bulks constitute just about 10 per cent of the total pharma production of Korea, its percentage of exports from that country is being registered at about 75 per cent.

The thrust on export of bulks has led to increase in import of necessary intermediates by Korea. Similarly, India''s exports of pharmaceutical items to Indonesia have never been substantive. This was because pharmaceutical sector in Indonesia remained dominated by Indonesians of Chinese origin. Thanks to their business links and ties with China, a major portion of the bulk drug requirements of Indonesia is met by Chinese imports. With India not being a member of the Pharmaceuticals Inspection Convention (PIC), Indonesian authorities doesn''t permit import of finished pharma products from India, restricting the trade to bulk drugs. With the southeast Asian economic crisis taking the toll, the production capacities of countries like Indonesia, Malaysia and Philippines had remained largely frozen for a long time, putting the foreign trade issue in the limbo.

The torpid condition is however changing, with the authorities in the region being increasingly seized of the potentiality of pharmaceutical trade among Asian countries. Such initiatives have already started yielding good results. The Basic Chemicals, Pharmaceuticals & Cosmetics Export Promotion Council (Chemexcil) of India has entered into an MoU with the Korea Pharmaceutical Traders'' Association (KPTA) to take steps towards increasing the trade cooperation between the two countries in the fields of pharmaceuticals and cosmetics.

The agreement would pave way for regional alliance amongst major pharmaceuticals trading countries in Asia with a similar agreement with Chinese Chamber of Commerce of Medicines & Health Products Importers & Exporters in the offing. Leading pharmaceutical manufacturing countries in Asia are also planning to establish a Federation of Asian Pharmaceutical Trading Associations soon, with a view to increasing the pharma trade among themselves and between them and the countries of other continents.

While the three countries - India, China and Korea - would be the founding members of the Federation, other Asian countries like Philippines, Thailand and Bangladesh have also agreed to be part of the umbrella organization. The proposed Federation would be mandated to make efforts to increase the acceptability of pharmaceutical items of the member countries in the region, by taking up issues with the drug regulatory bodies.

To give a boost to these efforts, the top anese Pharmacopoeias. The Korean FDA also has in principle agreed to formally recognize IP and has sought documentary evidence to support the demand for IP acceptance from India.

Other Asian countries including Philippines and Thailand are also in the process of officially accepting the IP. The proposed Asian Federation would also take up issues relating to the quality of pharmaceutical products in the member country, besides addressing regulatory procedures, which affects trade. One major reason for the pharmaceutical trade between major Asian countries not realizing its full potential has been an underlying suspicion amongst them of the quality of the medicines manufactured in the region. A shift from this doubt perception has however been very visible of late. The willingness of countries like Korea, Philippines etc to accept Indian pharmacopoeia buttresses this trend. In fact, following an intervention through the Indo-Philippines Joint Working Group, the Philippines government had made the largest ever bulk purchase of drugs from India during the year 2000.

Trading alliances in the region is going to be more robust in the coming years, as intra-Asian pharma trade offering cost-effective alterative to the governments in the region in their efforts to provide good quality medicines to its populations at reasonable prices. A case in point is the recent decision of the Department of Trade & Industry (DTI) of the government of Philippines to step up parallel importation of low-cost drugs from India, despite a pending petition by the Pharmaceutical & Healthcare Association of Philippines (PHAP), the local monolithic body of drug industry & trade intermediaries, which claims an exclusive distribution contract in the country.

While North America, Japan and Europe still dominate the global market for pharmaceuticals, the regional shares are now in for a major overhaul. From about 80 per cent in 1996, these countries'' share has dropped to about 75 per cent in the current year. While the rate of growth in USA is still around 17 per cent, in other developed countries like Japan and certain European nations, the growth has slowed down and even decelerated, giving way for countries with faster growth in the rest of the world like the Gulf countries, China, Australia and southeast Asia to increase their share in the world pharmaceutical market. Given the current trend, undoubtedly, within the global market, regional share are expected to change drastically. This calls for increased efforts by Asian drug companies to enhance the trade amongst them, and at the same time augment their supplies to these fast-growing markets in developing world.

While the supply of off-patent drugs to regulated markets remains as the most lucrative option, the ways to vanquish the developing countries'' markets should be different. As mentioned above, a positive feature is that the governments of developing countries - Philippines, Malaysia and Korea for instance - have started openly accepting the quality of Indian drugs and are keen to source their requirement of drugs from India given that the prices are much cheaper in comparison to the suppliers from developed world. Concrete governmental actions have been taken in these countries recently to increase their purchases from India and the Indian government is reciprocating.

A quantum leap in generic drugs exports to Asian countries is crucial for India to achieve the objective of effecting a manifold increase in export figures in the years to come. The cases of other major countries in the region are no different.

Upgradation and harmonisation of drug regulatory standards in the region, easing of procedural hurdles and introduction of more incentives for regional trade are the catalysts required for intra-Asian pharmaceutical trade to assume its true proportions.